Jenny Tooth CEO Accessing Angel Investment for your Low Carbon Business 26 th March 2013

The Funding Ladder and ecosystem: Risk reward ratio driving valuation CAPITAL NEEDS TIME SeedStart-upEarly GrowthSustained Growth High Risk Low Risk Friends, Family etc Business Angels & Co-investment Funds Formal Venture Capital - BGF Trade Sale IPO (AIM) Proof of Concept, R&D Grants & Loans The Funding ecosystem: Crowdfunding & Peer Lending Accelerators and Incubators

Angel Investing UK Business Angels invest £800m- £1bn p.a. (UK EIS stats) Approx 18,000 Angels (many invisible) VC Investment :£340m pa (BVCA 2012) Angel Investment = 3 x early stage VC investing Currently about 13% investment in Clean Tech incl. LC

Angel Investing Angels invest their own money-Bring equity, together with business experience, contacts Average Angel Deal : £50k to £500k first round- but recent deals done in syndication of £1.5m + Angels invest in syndicates, pooling finance and skills, usually a Lead Angel Entrepreneurial Angel Groups- “Super Angels” setting up angel funds and accelerators- often replacing VCs Angels prepared to do follow-on funding rounds Angels co-invest with VCs; Banks and crowdfunders, also R&D grants Angels are prepared to wait- Patient Capital ! 5 to 8 years to Exit

What are Angels looking for?  Entrepreneur or team with the skills and drive to build a growth business- passion and commitment!  Can address global/social/market challenges – eg Low Carbon!  Generally Post Proof of Concept- TSB grant validation is a bonus!  Scalable business model -10x x return  Can be pre-profitable, but must show how will achieve high turnover and growt h

Attracting Angel Investment  Customer validation – demonstrate customer commitment / orders/ will pay the price for your product /service  Built a defensible competitive position -IP protection(patents and scope), or first mover advantage  You know your competitors and how you differentiate  You are prepared to have investors on your Board and take strategic advice  You can identify how you will exit – angels need liquidity!

Enterprise Investment Scheme Investors can receive up to 30% tax relief and Capital Gains Tax- Deferral - Your Gift! Investors can invest £1m each year- Company can receive £5m EIS investment pa 250 or fewer staff; Restrictions on certain sectors(LV is OK) The investor cannot be connected to the business already Must hold the investment for 3 years Gain advanced clearance from HMRC

Seed Enterprise Investment Scheme SEIS Investors can receive up to 50% tax relief for investing in your business- Even bigger gift! Also exemption ( ) from Capital Gains- or (50%) Investor can invest £100k each year Maximum investment total for SME is £150,000 Early stage -25 or fewer employees and assets up to £200,000 Trading for no more than 2 years- can be pre-trading or business incorporated for longer. Gain advance clearance from HMRC!

£100m Angel Co-Fund Fund Managed by Capital for Enterprise Ltd Co-invests between £100K and £1M in SMEs alongside syndicates of business angels, with lead angel Upper limit of 49% of any investment round and can do follow-on rounds- Invests on same terms as angels. Application through the Syndicate- lead angel, not the entrepreneur

UKBAA Searchable online directory of Angel Networks; syndicates and individuals – filter by amount seeking/region Networks and groups organise regular pitching events, meet angels Process can take 1-3 months You need to kiss a lot of frogs! Finding Angels